Because little has changed since I wrote two articles in October, 2020, for about EDGE’s tax breaks for apartment developers, the first article is reprinted here and the second will be published tomorrow:


During a historic housing crisis, the chief city-county economic development agency, prodded by Memphis and Shelby County mayors, gave $58 million in tax breaks to subsidize construction of new apartments in Midtown and East Memphis.

Of the 1,300 apartments under construction, 273 will be set aside for less affluent residents, as required by EDGE (Memphis-Shelby County Economic Development Growth Engine). But even with discounted rates of 20% to 40%, rent will be unaffordable for the 51% of Black workers who make $15 an hour or less – the people who need affordable housing the most.

While the city struggles with a shortage of affordable rental housing, these tax breaks will do little to fill the need for 38,000 units of affordable rental housing in Memphis.

At the same time, the tax breaks give the developers a 75% discount on their property tax bills for as long as 15 years, depriving local governments of millions of dollars that could be spent on schools, safety net programs, health, public transit, and criminal justice.

That strikes advocates for struggling, blighted neighborhoods as fundamentally unfair. 

“In low-income neighborhoods like Klondike-Smokey City, there are so many issues and there are so many housing needs, but then we’re told, ‘We’re going to give millions of dollars in tax credits to developers,’” said Quincey Morris, executive director and president of Klondike-Smokey City Community Development Corporation.  

“The result is the underserved are made even more underserved.”

“Do we ever get to the front of the line when city government is giving out money?” she asked, repeating a question raised when the city spent $15 million for the Crosstown Concourse project.

Related: We sent a survey to six developers about their tax-subsidized apartment projects: One responded

Morris believes the answer is obvious. Her office at 943 Vollintine is bookended by vacant houses, the neighborhood is pockmarked by numerous empty lots where family homes once stood, and memories of what Klondike once was are overshadowed by today’s blight, neglect and disinvestment. 

A view of the Klondike-Smokey City Community Development Office. Photo by Brandon Dill for MLK50

Housing incentives programs like EDGE’s have been called a modern form of redlining because they regularly ignore low-income neighborhoods like hers, concentrating instead on areas with higher incomes.

“They mainly benefit the city’s already healthiest neighborhoods,” said Greg LeRoy, executive director, Good Jobs First, a national policy center promoting accountability in economic development.  

Such incentives help explain why Memphis is more segregated today than it was in 1972, said Dr. Elena Delavega, associate professor of social work at University of Memphis.  

“No one’s really looking seriously at the issue of apartments for people in poverty, and how low-income is defined even gets fuzzy,” she said.

”Poor people are mistreated in ways wealthier people are not. Living conditions are much worse. There are three or four families living in a two-bedroom apartment.  We end up pushing the poor to places of no opportunity because there is no accountability.”

The lack of accountability extends to the requirements  for apartment developers who get the EDGE tax breaks, called PILOTs (payment-in-lieu-of-taxes). EDGE also awards PILOTs for office buildings, distribution centers, and commercial and industrial projects.  

EDGE doesn’t specify where developers should build or which apartments in each project must be made available for low and moderate income renters. Even studio apartments can be used to meet the 20% “low to moderate” income requirement.

Studio apartments represent half of the 273 apartments developers promised to set aside for low to moderate income renters. Studios can limit the number of families with children who live in the developments.

Once the tax cuts expire, so can the discounted apartments. Developers can return all of the units to market rates, with nothing set aside for lower income renters, because their obligation to EDGE is over, said John Lawrence, EDGE Economic Development Specialist.

Construction continues on the Madison @ McLean apartment building in Memphis, Tennessee. Photo by Brandon Dill for MLK50

What is affordable?

Even the definition of “low and moderate income renters” affects who can rent the discounted apartments. 

A family of four with an income of $54,300 qualifies as “low income” under EDGE’s definition. That’s based on HUD’s determination of the median, or middle, income for the Memphis region: $67,900; low income is 80% of that amount. A couple making $42,450 a year qualify at the 80% level.

Half of all Memphians earn a lot less than 80% of HUD’s AMI. The Census Bureau’s median household income for Memphians in 2018 was $39,108. For African Americans, median household income is $29,449, compared to $54,282 for whites. 

As a result, EDGE-subsidized apartments are likely to attract renters with higher incomes, who are nevertheless considered low income under EDGE’S definition but who earn considerably more than half of Memphis households. 

The amount of rent isn’t the only factor affecting housing affordability for many Memphians. It’s also what share of their income goes to housing costs. 

“In Memphis, 78% of extremely low-income rental households – 58,265 (or more than 23% of all households in the city) – pay more than half of their incomes in rent,” said Dan Emmanuel, senior research analyst with the National Low Income Housing Coalition.

“These are households that earn around $25,000 or less for a family of four, so the cost of living is clearly not low enough for everyone and wages aren’t high enough.”

“Rent is typically a household’s largest and most important expense,” Emmanuel said.  “When households pay too much in rent, they are forced to cut back on other essentials like food, medical care, education, transportation, savings, etc., which negatively impact other areas of well-being.”

In federal parlance, families who pay more than 30% of gross income on rent and utilities are “cost burdened.”

Construction continues on the Thrive At the Park apartments at the intersection of Sam Cooper Blvd. and East Pkwy. in Memphis, Tennessee. Photo by Brandon Dill for MLK50

Adding to the burden for low-income renters:  the loss between 2006 and 2014 of more than 8,000 units with rent less than $750 a month, half of which rented for less than $500. 

For example, the fair market rent for a two-bedroom apartment in Memphis is $884 a month. To be affordable, a renter needs an income of $17 an hour, or $35,360 annually, according to the National Low Income Housing Coalition.   A one-bedroom unit with rent of $775 a month requires an hourly wage of $14.52 an hour. 

It doesn’t help that Memphis is considered a low-wage city. 

The median household wage for African Americans in Memphis is $15 an hour, $3 an hour less than in 2000, according to PolicyLink’s National Equity Atlas.  EDGE’s major tax-break  program, aimed at attracting and retaining major employers, allows hourly wages as low as $13 an hour.

A couple making the federal minimum wage of $7.25 and renting a two-bedroom apartment need to work 94 hours a week to afford it.  

It’s little wonder that more than half of Memphis renters meet the definition of “cost-burdened,” according to the Tennessee Housing Development Agency.

 That burden is seen in one in four Memphis families having an eviction filed against it each year, chiefly in African American and Latinx neighborhoods, said housing consultant Austin Harrison.

Apartments are being built at 1544 Madison Ave. in Memphis, Tennessee. Photo by Brandon Dill for MLK50

“Given the national crisis in housing affordability, we strongly disapprove of cities subsidizing housing with rents above median AMI (Area Median Income) HUD-burden rates,” said LeRoy. 

Eric Robertson, president of Community LIFT, predicts that EDGE-supported apartment developers will target renters at 80% AMI because they have higher incomes, rather than lower-income families who need housing most.  

“Organizations approving PILOTs should have to report how many renters are at 80% AMI, 75%  AMI, 65% AMI to make sure that a range of families are being served” as well as how many studio apartments are used to meet the low to moderate renter requirement, he said.  

Many “people working on affordable housing in Memphis don’t even think about EDGE,” said Roshun Austin, executive director of The Works Inc., a community development corporation that targets renters earning below 60% AMI.

She works with the Memphis Health, Educational and Housing Board because that agency shares the same affordable housing priorities as her group – people living in distressed neighborhoods and earning less than 60% AMI, or $33,950.

That’s why taxpayer subsidies should be given to developers “to produce housing that is affordable to people who need help,” said Emmanuel, the researcher with the National Low Income Housing Coalition.

EDGE’s role

Development of a communitywide housing strategy is not part of EDGE’s mandate from city and county governments, nor is it part of the agency’s strategic plan.

The agency was created in 2011 when the Memphis and Shelby County Industrial Development Board, the Memphis and Shelby County Port Commission, the Foreign Trade Zone 77, and the Depot Redevelopment Corporation of Memphis and Shelby County merged.  The Greater Memphis Alliance for a Competitive Workforce was added later.

Of the 10 agencies in Shelby County that can approve PILOTS, EDGE waives more taxes than all the others combined.  Other EDGE incentives are Tax Increment Financing (TIF), loans, grants, and bonds. EDGE’s website says one of its purposes is to “revitalize neighborhoods,” but its strategies for distressed areas center on commercial and industrial projects rather than on housing.

One of its newer programs, the  “Inner City Economic Development Loan (ICED) program, offers forgivable loans of up to $25,000 to improve commercial buildings in lower income neighborhoods.   But the average ICED loan of $23,438 in lower-income neighborhoods pales in comparison to the average $8.3 million tax cut for the seven apartment projects.

EDGE launched its “residential PILOT” program in 2017 amid political pressure from apartment developers after another city-county agency, the Downtown Memphis Commission, reduced the maximum term for its Midtown PILOTs from 15 to eight years. Urged by Memphis Mayor Jim Strickland, EDGE stepped in to add apartments to its portfolio with a maximum term of 15 years, not only for Midtown for anywhere in Shelby County.

EDGE voluntarily added the requirement that developers set aside 20% of units for low to moderate income renters.  It is not mandated by state or federal governments.

“This residential program is a big cultural shift for EDGE,” said Reid Dulberger, EDGE president/CEO.

EDGE added the set-aside requirement to its PILOTs because it “is helping to spread the impact of the PILOT and create access for as many Memphians as possible to take advantage of life in the new developments,” said Charles Vance, EDGE’s Director of Marketing and Communications.

The city’s master plan, Memphis 3.0, pointed out that the city “needs all types of housing at all price points” in order “to stabilize and begin growing its population,” Vance said. 

“We need everything from detached houses, mid-rise, high-rise,” Dulberger said, also referring to Memphis 3.0.  “We need every price point and focused attention on the supply side, and these projects would not otherwise have been built without a PILOT.” Without the incentive, it’s why there have been little to no new market rate rentals or apartments built in about 20 years, he said.

The future site of the University Park apartments at 3637 Park Avenue in Memphis, Tennessee. Photo by Brandon Dill for MLK50

Adam Underwood, a partner in Water to Wine LLC, which is developing University Park Apartments at 3637 Park Avenue, agreed.  

“The project would absolutely not have happened without the PILOT,” he wrote in response to written questions.  “These programs get knocked sometimes, but this property would remain a genuine blight without it.  I also like to point out that the property currently generates roughly $3,000 a year in real estate taxes.  Even with the tax abatement, the property will generate $65,000 a year in real estate taxes.”

The PILOT jumpstarts a “larger vision for this neighborhood, and EDGE’s PILOT program is specifically a catalyst for all the development we have planned,” he said.

Underwood said this is his first apartment project in Memphis, although he has “flipped and managed rentals (of single family houses) in high-end and lower-income neighborhoods.”

The apartment projects receiving tax breaks range in size from 80 to 350 units and are located in Midtown and East Memphis – along Madison Avenue near Overton Park, on Central Avenue, in the Broad Avenue Arts District, at Poplar Plaza at Highland Street and Poplar Avenue and at Park Avenue east of Highland Street. Five of the seven apartment projects received PILOTS of 15 years.

Underwood was the only developer to complete a questionnaire sent by a reporter seeking information for this article. 

‘Balance across the city’

Before EDGE approves a PILOT application, Dulberger said, it considers whether the rents can finance the construction, and whether the developer can get a reasonable return.

EDGE doesn’t consider whether employees of the companies it recruits or keeps in Memphis through its other incentives can afford to live in those apartments.

EDGE also gives tax breaks to companies relocating or recommitting to Memphis, but allows those companies to pay as little as $13 an hour to receive a PILOT.

So far, EDGE has not approved any apartment projects aimed solely at housing affordability, and only one project, at 1544 Madison Avenue, exceeds the agency’s mandatory 20% set-aside requirement for low to moderate income renters.

Dulberger said EDGE has “looked at renovation projects, but they are so much more complicated,” referring to the call by some affordable housing advocates for attention to be paid to the 38,000 affordable rental units needed in Memphis.  

“Where this goes in the future and how it changes is to be determined. We’ll do a couple more [PILOTs], step back, discuss with the mayors, and go from there. If we need to do more, we’ll look at it.”

If the decision is to do more of the same, Memphis and Shelby County’s powerful economic development agency, whose priorities and programs are shaped by city and county mayors, will have opted out of the battle attacking Memphis’ most demanding housing problems in favor of projects that garner headlines but fail the tens of thousands of Memphians in neighborhoods where the needs grow deeper by the month. 

“What’s required now is balance across the city,” Robertson said.

“What we see in Downtown, Midtown, and the Poplar corridor is development that has followed the strongest market demand. What we haven’t done well is the intentional alignment of resources, incentives, organizations, and infrastructure to incentivize and encourage demand in markets that are weak.”

Many of these markets crying out for attention are low-income neighborhoods, like Klondike-Smokey City. That neighborhood has lost half its population since 1980 and was struggling even before the COVID-19 pandemic. Today, it braces for higher unemployment and a wave of evictions more intense than the 2008 Great Recession. 

Surveying the Klondike neighborhood, Morris said: “Everybody wants to talk about economic development. How can we do economic development if it doesn’t consider how to improve the lives of people in neighborhoods like mine? Real economic development is about people first, not real estate.”

Next: Political Influence Gives Birth To Tax Subsidies For Apartment Developers